Reference no: EM133055814
Question - Zulu sport inc. manufacturers basketballs for womens national basketball association (WNBA). For the first 6 months of 2020, the company reported the following operating results while operating at 80% of plant capacity and production 120,000 units.
Amount
Sales 4,800,000
Cost of goods sold 3,600,000
Selling and administrative expenses 405,000
Net income 795,000
Fixed costs for the period were costs of goods sold $960,000, and selling and administrative expenses $225,000
In July, normally a slack manufacturing month, Zips sports received a special order for 10,000 basketballs at $28 dollars each from Greta basketball association. Acceptance for the order would increase variable selling & administrative expenses $0.75 per unit because of shipping costs but would not increase fixed cost and expenses.
Prepare an incremental analysis for the special order.
Should Zulu sports inc accept the special order, explain.
What is the minimum seeking price on the special order to provide net income of $5.00 per ball?
What non-financial factors should the management consider in making its decision?
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